Financial Services Committee

Legislation

The legislation, introduced by Insurance, Housing and Community Opportunity Subcommittee Chairman Judy Biggert, enhances the authority of FHFA’s Inspector General and expands reporting requirements to Congress.

On April 6, 2011, the Capital Markets Subcommittee approved H.R. 31 on a voice vote.

For years, the Federal government used the GSEs to make homeownership available to people who posed a greater credit risk and would not have otherwise been able to obtain mortgage credit. GSE-manufactured demand boosted home prices to artificially high levels and fostered enthusiasm for the wave of exotic mortgage products that began to flood the market. In light of the risks created by requiring the GSEs to promote affordable homeownership, this bill repeals the GSEs’ affordable housing goals. The legislation is sponsored by Rep. Ed Royce.

On April 6, 2011 the Capital Markets Subcommittee approved H.R. 1226 on a voice vote.

The legislation, introduced by Rep. David Schweikert, prohibits the GSEs from offering, undertaking, transacting, conducting or engaging in any new business activities while in conservatorship or receivership. This restriction will reduce Fannie Mae’s and Freddie Mac’s market dominance and limit their size.

On April 6, 2011, the Capital Markets Subcommittee approved H.R. 1227 on a voice vote.

The Small Company Capital Formation Act encourages small companies to access the capital markets — allowing them to invest and hire employees. The legislation increases the offering threshold for companies exempted from SEC registration under SEC Regulation A from $5 million — the threshold set in the early 1990s — to $50 million. The SEC has the authority to raise this threshold but has not done so for almost two decades. The bill is spnsored by Representative David Schweikert.

The legislation, introduced by Rep. Steve Pearce, requires the Treasury Department to approve any new debt issuance by the GSEs. If Treasury approves a debt issuance, it must explain and justify its decision to Congress and the FHFA within seven days. The legislation limits the amount of GSE risk taking.

H.R. 1225 was approved on a vote of 18-0-1 by the Capital Markets Subcommittee on April 6, 2011.

H.R. 830, introduced by Rep. Robert Dold (R-IL) on February 28th, terminates the FHA Refinance Program and protects taxpayers from having $8 billion of their money from being spent on this ineffective program.

Background:
In March 2010, the Administration announced the creation of the FHA Refinance Program to refinance underwater loans into the FHA. The program is funded with $8 billion in TARP funds. According to Treasury’s TARP Progress Report, only $50 million of this $8 billion had been disbursed as of February 3. The Administration originally estimated this program would help between 500,000 and 1.5 million homeowners. However, only 44 loans have been refinanced as of mid-February and only 245 applications have been submitted, according to FHA Commissioner David Stevens. Without action by Congress, the FHA Refinance Program will continue until December 31, 2012.